Why Every Norwegian is a Millionaire | Nicolai Tangen | TEDxArendal

[Music] a few days ago i got this i got it from a four-year-old norwegian girl called elisa and in the jar there are three norwegian crowns and on the card it says dear nikolai could you please look after my money in the oil fund now i keep this jar in my office to remind me what my job is about is to safeguard the wealth for future generations and being the ceo of the biggest sovereign wealth fund in the world on behalf of all norwegians and you guys is such an honor that's why i just love my job now the numbers ticking behind me here is the real-time value of the norwegian sovereign wealth fund this fund is basically the resources that we have generated on the norwegian shelf and it belongs to all of us not just someone the fund and the money from the fund pays for roads education and healthcare and it is the savings for our children their children and their children again and if you can convince me that there is a better job out there than looking after this wealth you have to give me hearing now how did we end up in this situation how did we end up with this fortune we need to go all the way back to the north sea to 1965 when the norwegi when the shelf was divided between denmark norway and the united kingdom and little did we know that we would end up with all this wealth so the foreign exploration companies they were drilling and drilling and they didn't find a thing one empty well after the other one of these foreign companies was philips petroleum and in 1969 they were drilling the last well we have to go out now to the north sea okay a dark cold day in october and we are on board you know the rig ocean viking it's two o'clock in the morning and stolle salvation was told to wake up the rig chief at seabourn two in the morning at seabourn was not pleased hey you need to have a very good reason to wake me up in the middle of the night well he for sure had because they had just found echo fisk the largest offshore oil field in the history a couple of months later phillips announced to the norwegian government that they had found oil this was the day before christmas eve wow what a christmas gift to the norwegian people or was it actually in many countries where they had found the oil it had been a curse rather than a blessing it had crowded out some other industries had led to under investments in various areas it had led to corruption had led to some people becoming very very rich so the question was you know how is nowhere going to cope with this how are we going to avoid what is called the resource curse the financial times wrote an article about this and they said you know the big accomplishment here is not that norwegians found the oil it's how they actually cope with it and it was clear as the country became an oil producer that we needed to have some rules to help us navigate this and so in the early 70s the government passed a white paper through parliament and this contained what was called the ten oil commandments now they stated that the resources on the norwegian shelf should be to the benefit of all of us not just someone and this has been the guiding principle behind the norwegian oil policy ever since now as more and more fields were developed in the 70s and 80s you know the oil revenue just exploded and so in 1990 the government passed an act where they said that all this revenue needs to be put into a separate fund and in 1996 the first transfer happened now this shows the transfer and it is probably the most important piece of paper in modern norwegian history we've not had 25 years since the first transfer the fund has grown from 2 billion to close to 12 000 billion that's equivalent to two million crowns per norwegian now that is also elise's share and that is why we work so hard in the oil fund now the idea behind the fund was simple the politicians could only spend the return from the fund the idea was to save this for future generations with a very very long time horizon the perspective was basically eternity now when you have eternity as your horizon you can be counter cyclical and that means you can do the opposite of other people when they sell shares you can buy them that's how you make a lot of money in 2008 we were hit by the financial crisis now it is the norwegian politicians who decide how we should invest the money okay luckily for us in the middle of 2007 they had decided that we should increase the proportion of equities from 40 to 60 now i remember the financial crisis very well i hadn't started in the old fund but i did work in finance in london and i woke up every day with a stomach thinking how is this day going to pan out you know big banks which were considered too big to fail they went bankrupt people lost a lot of money you know there were devastations and bankruptcies but while most other people sold equities and reduced exposures the norwegian oil fund bought shares during the financial crisis the oil fund bought 1 000 billion worth of shares during those two years a small country with less than 0.1 percent of the world population bought more than half a percent of all the listed companies in the world wow today two-thirds of the value of the oil fund is the return that we have made for our investments and in a way you can say we have found oil twice first on the continental shelf and secondly in capital markets the way i look at it as is as is as if we have like a big sack of money and we start out in the middle of the day in europe then in the afternoon we moved to america and then during the night we moved to asia to singapore and then in the morning we get it back the money sleeps one hour the remaining 23 hours the money works on behalf of all norwegians it is now so big that the contribution from the fund accounts for more than 20 of the state budget now this would not have been possible without some really good founding principles from the politicians at the time hard work from the people in the oil fund and we have to admit a bit of luck and it's not only the billions which are important here it is also the fact that it's owned by all of us now we invest in the future of the country we take care of the money that belongs to elisa and generations to come thank you very much [Applause] [Music]

Channel: TEDx Talks

Views: 38,259

Keywords: Business, Economics, English, Finance, Investment, Society, TEDxTalks

Id: 5yIF4KSiXLY

Length: 10min 44sec (644 seconds)

Published: Fri Dec 10 2021